Intel Shares Surge as $7.9 Billion Federal Boost Fuels U.S. Chip Ambitions
1min read Intel has recently been confirmed to receive close to $7.9 billion in federal grants under the Biden administration's initiative to bolster domestic chip manufacturing. This direct subsidy marks the largest in the program aimed at revitalizing the U.S. semiconductor industry. While the agreement's size is less than the earlier proposed amount of $8.5 billion, it paves the way for Intel to begin accessing these funds once its projects in Arizona, Oregon, and New Mexico meet set benchmarks. According to insiders, Intel's long-delayed Ohio project has yet to qualify for federal support, although it has secured $2 billion from the state.
Intel's CEO, Pat Gelsinger, reaffirmed the company's commitment to U.S. investments, even after announcing layoffs of 15,000 employees and postponing the Ohio plant. These developments have raised concerns among U.S. officials regarding Intel’s ability to fulfill its expansion promises. In spite of these setbacks, the administration views finalizing the subsidy negotiations with Intel as critical, especially with upcoming elections, hoping to solidify the 'Chips Act,' seen as a significant achievement of Biden's tenure.
The U.S. Commerce Secretary highlighted that the subsidy would enable Intel to ramp up its chip design, manufacturing, and packaging within the U.S., enhancing the country's competitive stance in the global semiconductor landscape. Additionally, Intel is expected to apply for investment tax credits from the U.S. Treasury, theoretically allowing for a 25% credit on investments exceeding $100 billion.
As part of its broader plans, Intel is looking to utilize the funding to support over $100 billion in investments aimed at expanding chip production capacity across its various U.S. sites. This initiative is not only poised to create significant employment opportunities but also contribute to the rejuvenation of the American semiconductor sector. Furthermore, this aligns with Intel's strategic vision to enhance its market position and address prior technological lapses.